United States District Court, E.D. Arkansas, Western Division
MEMORANDUM OPINION AND ORDER
MARSHALL JR., UNITED STATES DISTRICT JUDGE
After the death of a wealthy matriarch, her son and grandson
made competing claims to a $100, 000 certificate of deposit
issued long before by Southern Bancorp's predecessor. The
son threatened to sue. The bank paid him, receiving an
indemnity agreement in return. This case is the
grandson's answering suit against Southern Bancorp.
1998, Mary Berry opened a $100, 000 certificate of deposit at
First National Bank of Blytheville. CD No. 55594 named Mary
Berry- the Grandmother - and Kenneth Berry Jr. - the Son - as
joint tenants with right of survivorship. The CD stated on
its face that it was "NOT NEGOTIABLE" and "NOT
TRANSFERABLE." No 31-1.
For about six years, the bank issued interest checks and
renewal notices in the names of Grandmother and Son.
Grandmother had many CDs at the bank. She did her business
there in person. In February 2005, Christopher Berry Thomas -
the Grandson-replaced Son on the interest checks and renewal
notices for CD No. 55594. For more than a decade, the bank
issued these checks and notices in the names of Grandmother
and Grandson. No 42 at 8-11.
These renewal notices, addressed to both Grandmother and
Grandson, stated that "your certificate will
mature" and "your certificate of deposit (CD)
number ******** 594 will automatically renew . . .[.]"
No 42 at 11-12. Like all the
CD-related mailings, the notices were sent to
Grandmother's home. Grandmother died in November 2014.
Grandson continued to cash the interest checks after her
death. No 41-2 at 1. In
December 2015, Grandson demanded payment on the CD, along
with two other CDs, from Southern Bancorp, which had acquired
First National. Son also demanded payment, threatening a
lawsuit. No 42 at 16-17.
Neither Grandson nor Son presented the original CD to the
bank. It never surfaced. The bank was faced with conflicting
internal records -its computer system, along with renewal
statements and interest checks, showed Grandson as the owner;
the bank's vault copy of the CD showed Son as the owner.
Southern Bancorp paid about $105, 000 to Son in December
2015. Son agreed to indemnify the bank if someone else was
entitled to the CD proceeds. No 42 at 14. The bank's form closing the
account listed the CD's owners as "Mary Berry,
Christopher Thomas or Kenneth Berry." No 42 at 13.
are the material facts, taken in Grandson's favor where
genuinely disputed, on Southern Bancorp's renewed motion
for summary judgment. Woods v. Daimler Chrysler
Corporation, 409 F.3d 984, 990 (8th Cir. 2005). The
Court granted the bank's original motion on
Grandson's fraud claim, denied the original motion on his
contract-based claims, and directed more discovery to fill
out the record so the Court could decide whether there were
any issues for a jury. The discovery was done. And Southern
Bancorp has renewed its request for judgment as a matter of
law on the rest of the case.
first difficulty for Grandson's contract-based claims is
that the breach claim belonged to Grandmother, then her
estate, not Grandson. The CD was a contract between
Grandmother and the bank. And the estate did not pursue this
claim, perhaps because both of Mary Berry's children (Son
and Grandson's mother) were the co-executors.
bank argues that Grandson could not have been an owner of the
CD. The vault copy of the certificate named Grandmother and
Uncle as joint tenants with right of survivorship. Under
Arkansas law, the designation of ownership in an account
document, including a CD, "shall be conclusive evidence
in any action or proceeding involving the deposit account of
the intention of all depositors to vest title to the deposit
account in the manner specified in the account
documents." Ark. Code Ann. § 23-47-204(b)(3). And,
in the absence of fraud, the surviving joint tenant owns the
account by operation of law. Williams v. Davis, 2009
Ark.App. 850, at 7-8, 373 S.W.3d 381, 386. While the statute
may answer the question about the ownership of the now-lost
CD No. 55594, it does not address Grandson's deeper
contends that he was a third-party beneficiary of a contract
between Grandmother and the bank made in late 2004 or early
2005 to cash out CD No. 55594 and create a new CD naming
Grandson instead of Son the co-owner. To reach the jury,
Grandson must offer sufficient evidence that Grandmother and
First National made an enforceable contract. And he must show
"substantial evidence of a clear intention to benefit
[him]." Perry v. Baptist Health, 358 Ark. 238,
244-45, 189 S.W.3d 54, 58 (2004).
no document or note reflecting an agreement between
Grandmother and the bank to make Grandson a co-owner of the
CD. No 42 at 14. But the
bank's computer system showed Grandson instead of Son as
one of the CD's owners. And it's undisputed that the
bank sent interest checks and renewal notices to Grandmother
and Grandson at her home address for more than ten years. The
checks named them both. The bank's 30(b)(6) witness
agreed that, other than one instance involving a recurring
charitable donation that she knew about, interest flows to an
account's owners. And the notices referred repeatedly to
the CD as "your certificate."
also offers affidavits from his mother, Melinda Porter, and
his Grandmother's sister, Margaret Childers.
No 41-1 &
No 41-3. The bank points out
that most all this testimony is inadmissible. Statements
about what Grandmother told them about the CD and the
interest checks are hearsay, not within any exception.
Attached to one of the affidavits, there's a note -
"This is for Christopher on my death
9-11-09" - seemingly handwritten by Grandmother on an
envelope containing a CD statement. No. 41-1 at 3. The note is also inadmissible
hearsay. Grandmother's remarks and the note don't
prevent summary judgment. Brooks v. Tri-Systems,
Inc., 425 F.3d 1109, 1111 (8th Cir. 2005).
doesn't need the hearsay, though. Based on the rest of
the record, taken in the light most favorable to Grandson, a
reasonable jury could find that Grandmother and the bank had
an agreement to make Grandson a co-owner of the CD, and that
the bank failed to properly implement the ownership change.
Grandmother's sister says she often accompanied
Grandmother to the bank, where she did her business in
person. In the mid-2000s, Grandmother made several CD
ownership changes favoring Grandson in her many CDs. The
original CD No. 55594 has never been found. And years and
years of renewal statements and interest checks listed
Grandson as a co-owner. One reasonable inference from the
whole is that the bank fumbled on this CD. Another, of
course, is that it did not-see, for example, the absence of
any bank document about a requested ownership change. A jury
also argues that promissory estoppel applies. He must
establish this claim "strictly, there must be certainty
to every intent, the facts constituting it must not be taken
by argument or inference, and nothing can be supplied by
intendment." KG Properties of N.W. Arkansas, Inc.,
v. Lowell Investment Partners, LLC, 373 Ark. 14, 30, 280
S.W.3d 1, 14 (2008). There's not enough evidence to
support a verdict for Grandson on this alternative theory.
second difficulty for Grandson is the calendar. The statute
of limitations for breach of a written contract is five
years; for an oral contract, it's three years. ARK. CODE
ANN. §§ 16-56-111 & 16-56-105. The new CD
should have been created, Grandson says, in late 2004 or
early 2005. He sought payment in 2015, some ten years later.
fraudulent concealment occurred. That defense requires
"something more than a continuation of a prior
nondisclosure[;]" there must be some "furtively
planned and secretly executed" scheme. Meadors v.
Still, 344 Ark. 307, 315-16, 40 S.W.3d 294, 300-01
(2001). There's no evidence the bank prevented
Grandmother or Grandson from reviewing all the bank's
account information and discovering the conflicting ownership
information. No. scheme was involved.
also says the bank should be estopped from invoking the
limitation period. Estoppel tolls the statute when a
party's actions "have fraudulently or inequitably
invited a party to delay commencing legal action until the
relevant statute of limitations has expired, or when he has
done anything that would lull the other party into inaction
so that his vigilance is relaxed." Taylor v.
Taylor,2009 Ark.App. 605, at 7-8, 343 S.W.3d 335, 339.
The bank must have known the facts; it must have intended
that its conduct be acted on, or must have acted so Grandson
had a right to believe the bank so intended; Grandson must
have been ignorant of the facts; and Grandson must have
relied on the bank's conduct to his ...